Internationalization of start-ups

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Internationalization of start-upsA great moment in time for global innovation.Global pace of innovation can be in danger..Opportunities and SolutionsHow to fix the problemMore financing available every yearLess costly to start a business: US$150 - US$65kGood initiatives are being turned down as not aligned with investment cycles1000+ start-ups penniless in 201367%+ start-ups each year do not receive funding after seed round$1B of initial funding gets wasted with 0 ROI3. The level of Series A activity is holding steady, but the number of seed deals have exploded!

AS A RESULT OF THE DISBALANCEMore companies are being founded, fighting for less series A fundsREALITY CONCLUSIONSInnovative start-ups get acquired asap by predators due to lack of follow-on funding, along with booming Acqui-Hire practicesInnovative start-ups do not get proper visibility and tractionUNSUSTAINABLE venture capital system that endangers innovationSupport the early internationalization of start-ups to assure their visibility, traction, market share, revenue and employees growth and the building of a more robust business, unlikely to get acquired for a minimum valueABOUT THE RESEARCH To empirically prove the correlation between international expansion and start-ups' long-term, billion-$ successRESEARCH PURPOSE:

Quantitative data + interviewsABOUT THE RESEARCHMajor research takeaways Think globally right from the startExpand as soon as MVP is readyParallel rather than sequential expansion processInternationalization promotes innovation, R&DEarly internationalization grabs VC's attention & moneyMajority of ''Unicorn companies'' expand from 0-4 years after foundingOutline common internationalization challenges

A correlation between moment of expansion and performanceThe majority of ''unicorns'' in Big Data expanded in 3-5 years since foundingCASE STUDIESUS - EcommerceA new historic record!Reality checkInnovation funding is big business — and is getting bigger. And it’s moving fast. It has momentum.Here is why...HOWEVER1. VCs prefer industries with fast route to returns and invest in start-ups in later stages, due to short 3-5 years funding cycles2. Only 27% of incubator-funded start-ups were able to find follow-on venture funding after 1 year and only 36% since 2005More great news for global innovation & entrepreneurship...Increase in global start-up incubators and angel investorsAngel participation rose from 13% to 25.5% between 2007 - 2013Angels and VCs are working together, crowdfunding is building up and governments start to play crucial rolesGlobal pace of innovation can be in danger..Software and Consumer IT Services = 70% of total deals in US, Israel and Canada (2013) and more than US$12b investmentUneven venture market - during booms periods, unjustified exuberance rules. ''Money chasing deals''Global pace of innovation can be in danger..RISK OF 'SERIES A' CRUNCH4. VCs invest more capital than they managed to fundraiseAs VCs complete fewer deals, but larger amounts, in later stages, there is an increasing funding gap formingGlobal paste of innovation can be in danger..5. Angel investments grow, but involvement in the revenue generating and profitable stages of start-ups are in single digits in 20136. Access to equity is difficult for investment-intensive and truly innovative sectors, such as CleanTech, Healthcare. With less than US$5m funding, R&D is impossibleIn 2014, VC investment in CleanTech was only US$2b (an average of US$9m per round) for 202 dealsIn 2014, VC investment in Mobile was more than $US7b (an average of US$6m per round) for 1000+ dealsIn 2013, there are only 45 newsworthy biotech startups that received more than 10$m in first-round fundingRevenue generation = 10% of all angel roundsProfitable = 5.3%Startup development = 25.5%Product development = 17.5%In 2013, angel investment by stagesWall Street also wants piece of the pie - now a direct playerCASE STUDIESUS - Ecommerce1234567891012131415161718Companies that went international faster in the time range of a year to 3 years period demonstrate enormous growth (10,000%+)